The Role of Modular Upgradability as a Green Design Strategy

Modular upgradability has been suggested as a strategy for improving environmental performance: As technology improves, it allows for independent replacement of improving subsystems, instead of replacing the entire product. This may extend the useful life of the stable subsystems, reducing production and disposal impact. However, this argument ignores the effect of modular upgradability on a firm's development and introduction decisions, which influence how and when product improvements are introduced, making existing products obsolete. This argument also ignores the environmental impact during the use phase. In this paper, we investigate when modular upgradability leads to lower environmental impact and higher profits. We do so by endogenizing a firm's development and introduction decisions and considering the product's environmental impact during its entire life cycle. Our results show that while modular upgradability may accelerate the replacement of some subsystems, it delays the replacement of other subsystems. We find that modular upgradability can increase the environmental impact for some product categories due to accelerated obsolescence arising from more frequent introduction and replacement. However, we also find that accelerated obsolescence, under some conditions, can actually make modular upgradability greener